Magellan expands, lifts underlying profit
Fund manager Magellan Financial Group has lifted first-half underlying profit as it grows its funds base, and is taking over two fund managers, including Australian operation Airlie.
Magellan's underlying profit rose 25 per cent to $109.2 million in the six months to December 31, as it expanded its total funds under management to $57.9 billion, up from $50.6 billion in mid-2017.
Net profit fell 39 per cent to $53.6 million because of costs associated with the ASX float of Magellan Global Trust in October, following a $1.6 billion initial public offering.
Magellan's funds were divided with a third in Australian equities, almost half in global equities, and the balance in infrastructure.
The company, which lifted its interim dividend by 16 per cent, said it was pleased with the level of interest in its global listed infrastructure strategies and expect this to grow over time.
Magellan also announced two acquisitions, including a deal with Airlie, which has funds under management of more than $6 billion.
The deal will be funded by the distribution of Magellan shares to Airlie shareholders, and the Australian company will become a wholly-owned subsidiary of Magellan while continuing to operate under the Airlie brand.
Magellan has also bought Frontier Partners, which has been Magellan's distribution partner in North America since 2011.
"This is an important step for the group as we continue to strengthen our distribution efforts in North America," Magellan said.
The acquisitions will be paid for with $15 million in cash and about 4.5 million Magellan shares.
Magellan expects they will modestly increase the company's earnings per share in the first full year, and provide an attractive return on capital.
Magellan shares were down $1.64, or 6.1 per cent, at $25.28 at 1340 AEDT.
MAGELLAN'S PERFORMANCE AT A GLANCE:
* Net profit down 38.6pct to $53.6m
* Underlying profit up 25pct to $109.2m
* Revenue up 27.5pct to $195.8m
* Dividend up 6.1 cents to fully franked 44.5 cents
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